This is Course 2 in the Introduction to Blockchain course series.
Blockchain technology is in a period of exceptional growth, and the accounting profession will play a significant role in driving its adoption. Be part of the blockchain evolution with this course. Starting with a focus on the history and evolution of blockchain and bitcoin and then on to the characteristics of bitcoin, you will get a refresher on the fundamentals of money/currency and learn how bitcoin fits into the global business landscape. This course also demonstrates the unique characteristics of blockchain and bitcoin, so accounting and finance professionals will be able to have meaningful and relevant conversations with internal and external clients.
In addition, this course introduces several key concepts within the realm of blockchain, including core components of blockchain technology, the custody, responsibility and control continuum, push vs pull paradigm and private blockchain vs public blockchain, which will significantly impact the way accountants and auditors perform their job functions.

Рецензии

Преподаватели

AICPA

Текст видео

So next, we're going talk about web wallets, mobile wallets, and browser plugins, and these wallets are software accessed via website, apps and plugins. So what we talked about before was, what are the types of questions you should ask when you're going into these different areas. So first off, always ask who controls the private key. The law of private key says, "If you hold the private keys, you own the crypto, and if you don't hold the private key, you don't own the crypto." So you need to make sure that you do own it in this situation. So users can control private keys with all of these wallet types that we're discussing. So some examples are, wallet providers may offer more than one type of wallet. So Jaxx is a mobile app, a Chrome extension, and the desktop wallet, it's also a multi-platform on iOS, Android, Windows and Mac. Blockchain.info is a mobile app, a web wallet, and a block explorer where you can get your own wallet for free. Desktop wallets is downloaded and installed directly on a computer. The software needs to be a full node, and it verifies all the rules or protocols. It can be either a light client or a full node client. So for example, Bitcoin Core is a full node client; it downloads the entire blockchain. Electrum is a light client using SPV to verify transactions. Both control the private keys and verify the blockchain. It's a full node, that means it has the full blockchain. So more secure than web or online wallets. Is there anything you wanted to add to this? Yeah. So the light client is an excellent example of a desktop wallet. Again, where you can control the private keys and so forth, but what it does, the reason it's called light is because it doesn't download the entire blockchain and SPV is simple payment verification. So it's just really looking to verify. That's to say, the simple way to think about it, it's just verifying the few previous blocks. So let's say it's looking at the set last six blocks. In the case of Bitcoin, because essentially, it's agreed upon that the probability of rewriting the blockchain after six blocks, essentially approaches zero. It's really after even a couple of blocks. But after six, it's like, if you're going to send a $1 million transaction, you're confident after six block confirmation. So it just doesn't download the entire blockchain, but still has really the security factor. It's a different way to do it. You're not taking up as much computer storage space and so on and so forth. So again, it's not always that easy to know. Especially, if you're first getting into it, there's not like, speaking of standards and things, it will be good if there was some type of a little icon, if you went to a site that she would know, "Okay, this has allow me to control my private keys," you have to dig a little bit. Right. You have to look in frequently asked questions or about. Once you get into it after a while, if you're in the space and spend more time on it, and you'll know these things, but it's not always so obvious. Sometimes, you have to do your research. Yes. So custodial wallets, custodial manages the usernames, passwords, and private keys. As the name implies, the private keys are not personally controlled, and cryptocurrency is not personally owned with this scheme. So for example, Coinbase is a universal platform, and it's most widely used. So you've probably heard of that as a way to buy bitcoin and other currencies. The most common custodial wallets are also centralized cryptocurrency exchanges, a platform to buy and sell cryptocurrencies, which we'll get into as well, that these are just a whole another area of cryptocurrency that we're not getting into this module but in other modules. Most crypto exchanges are akin to third-party financial institutions, and the examples are, Poloniex, Bittrex, and Kraken. Actually, I would like to say, ironically, in the world of decentralized and distributed blockchains, the exchanges, the places where you go to buy and sell cryptocurrency are third-party exchanges which are akin to third-party financial institutions. However, it's important to note that there are decentralized models that do exist. They have may be comprised less than one percent of the volume of all transactions, but they do exist and will likely gain more traction, but right now, most exchanges are third parties. One of the things with this that I think protects with one of the questions is, if you get locked out, you have someone to call? That's correct. Yeah, that's right. So where you have that fear of losing that paper, losing that key or there's no central place, this is where some of these central places come into play, and then we have to figure out what is our tolerance for how much we want at third parties versus ourselves. That's exactly right. You do got it perfectly there. So you have a choice. That's the whole thing here. There's a spectrum, you have a choice. So somebody may say, "Oh, I heard that whole private key thing. If he leaves that private key, you lose all your assets." So people, "I'm afraid to get in." Well, everybody should actually use Coinbase because it's a place that you can buy and sell easily with the bank account, the credit card, it's a default, a place to start. Everybody should have that and usually does. So Coinbase will be a place. Yeah. If you lose, so you can go there. You can buy your bitcoin, you can buy your theorem, even Litecoin. But if you lost your credentials, you'd have a place to call, like a bank account. So you can start there without being maybe nervous or anxious about it. About losing your key. Yeah. I've actually thought some people are so nervous to start. So that's a way to get into it- Yeah. -without having the risks right off the bat. So you want to talk about this example? Yeah. So in the mnemonics, we talked about the BIP standards and so forth and how they're related to word. It said that BIP39 standard is the one that came up with the mnemonic seeds. So this is, you can use a 12 or 24-word seed depending upon the hardware wallet or other types of wallets that used this, but it comes from a, there's like a 248-word list. 2,048. Word list, yes, 2,048 word lists. So what's interesting is, with this method, it's like an alternative to a private key, but it has the same level of security, if you will. So the words are randomly generated. Also, you can save the first four letters, you'll see on the right-hand side there, you don't even have to copy interestingly enough the entire word. Now, probably best to do it, but you could just copy the first four letters. If you do that, it will auto-populate the rest. In other words it knows what the rest of the word is. You only need to capture the first four letters there. Because that's the case, there's not going to be any words where the first four overlap and happened to be the same as another word. So basically, these words are, essentially, the words are mathematically turned into numerical characters, like there's a hashing exercise. It's quite complex, but essentially, the words are turned into numbers, and you get the same level of security, as you would, with a private cases, an alternate way to do. As a matter of fact, one other point on that is, it's my favorite way, my personal favorite way, to secure cryptocurrency. I love when this model is the thing that's the basis of a wallet. The reason is because all I know I have to do is secure 12 words or 24 words, whatever the case is, but that's it. So my question would be, how would you do that? As somebody told you, you had a million, did these 12 words represent $1 million of assets. How would you go about doing it? Really, just usually run vault process. As an accountant and auditor, how would you do it? To me, it's so simple that way. That's all I have to do. As long as I can secure and capture that, I'm good. So I can lose the hardware wallet. I can restore my assets. I just need to make sure I capture this, just follow over 24 words. That's tight. At the bottom of that slide, it shows a word list, which I think is a good resource to go to if you want to check your words that you would choose as well. Right.